Demonetization and the Normalization of Agrarian Distress

by Aniket Pankaj Aga

“You are relating two unrelated things,” said B. Radhakrishnan, the collector of Nashik district. I had asked him for an official estimate of the loss to farmers in the district on account of the crash in tomato prices after demonetization. “Demonetization has had a very small impact. There is a glut in the market, and prices are a purely market-driven activity. Do you want the government to control prices?” he asked.

It was a stark contrast to the concerns of Dnyaneshwar Ugale, the young, diligent district correspondent for the Marathi agrarian newspaper Agrowon, who was from a farming family himself. Based on a back-of-the-envelope calculation, Ugale pegged the losses at ₹1 billion for just the first fifty days.

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Located in the northwest of the state of Maharashtra, Nashik district is famous for its vegetables and fruits, especially tomatoes, onions, and grapes. For example, roughly one out of every four tomatoes sold in India during the growing season of kharif (September–December) 2016 came from Nashik. Over the last decade, its vineyards have become a popular weekend getaway among young Indians with disposable incomes, and there is talk of branding Nashik as India’s Napa Valley. These visions are very distant from the lives of farmers who must cope with increasing risk and indebtedness, booms and busts, erratic rainfall and climate uncertainty. The district is also not exempt from the tragic phenomenon of farmer suicides: at least eighty-four farmers committed suicide here in 2016 alone.

Farmer informants told me that kharif 2016 had been a good growing season, with rainfall that was just right and without major pest incidents. They were expecting a bountiful harvest and average returns, knowing well that good harvests depress prices. Tomato prices were decent in early October, and about break-even at ₹6.5 per kilogram in early November, they said. After the announcement of demonetization, however, the mandi in Nashik—a key government-administered procurement hub—shut down for three days as licensed buyers ran out of currency, forcing distress sales of perishable produce. As peak harvests met a severe cash paucity, tomato prices plummeted by over 67 percent, selling at ₹0.5–2 per kilogram after November 9. Prices never recovered thereafter, as a large number of cash-strapped traders closed shop weeks before the end of the season. The rock-bottom prices did not even pay for harvesting and transporting tomatoes to the mandi. Consequently, during the months of November and December, frustrated farmers slashed and destroyed standing vines and dumped tomatoes on the road.

Videos by Chitrangada Choudhury/People’s Archive of Rural India.

Farmers are no stranger to market volatility. But what angered many was that demonetization, unlike other variables that determine income, was a premeditated intervention. They complained bitterly about its timing: invalidating 86 percent of currency right in the middle of harvest season, and pulling the rug from under the vegetables market. Yogesh Gaikar, who had planted tomatoes over ten acres, and sold most of them at a loss, despaired: “Just when we were about to make some money, [Prime Minister Narendra] Modi has kicked us.”

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The untroubled air of district administration offices was a world away from the anxiety and despair on farms and at mandis. From the collector to the district agriculture staff, there was a breezy consensus that overproduction had crashed tomato prices. Never mind that farmers reported rock-bottom prices even for crops like cauliflower, eggplant, and bottlegourd, which had not been as widely planted. Never mind that onion prices were down, too, even as supplies were lower than in 2015. Never mind that, as per Ugale as well as several buyers and farmers, the district had not seen destruction of a standing tomato crop on this scale before.

Maybe the significance of the overproduction thesis lay not in its being right or wrong, but in allowing officials to exonerate demonetization and wash their hands of agrarian distress. For, fundamentally, overproduction is not an explanation. Its link to market collapse is neither natural nor inevitable, but unambiguously political.

Nashik has been a hub for vegetables for decades. Tomatoes from the district are sold not just across India, but also in Pakistan and Bangladesh. This business is entirely in the hands of traders, and the state has largely limited itself to taxation. Unlike sugarcane, whose selling price is a frequent flashpoint between sugarcane growers and sugar factories and is frequently the object of state intervention, tomato (and other vegetable) prices are left to the loosely organized lobby of traders. While there is a precedent for declaring a minimum support price for tomatoes (for instance, in Karnataka in 2011), the Maharashtra government chose to stay aloof. Additionally, there has been no significant investment in processing or refrigeration infrastructure, which can potentially buffer price shocks.

In these ways, much of agriculture has been abandoned by the government to the “purely market-driven activity” invoked by Radhakrishnan, the collector. When pressed for an official response to spiraling losses, he offered: “We advise farmers to diversify their crops, not to grow a single crop.” I have conducted fieldwork over several spells in this region since 2011, and not once have I, or my informants, encountered such advisors—but again, that’s missing the point. If farmers are losing money, clearly, they are not diversifying enough. Overproduction talk was always a euphemism for blaming the farmer and normalizing agrarian distress.

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In February 2017, Prime Minister Modi asserted in the Parliament that demonetization was the right decision at the right time. This gets at a measure of the disconnect between the realm of governance—from the prime minister down to the district administration—and the lived experience of farmers. It is also indicative of the epistemic chasm that any political platform of farmers, themselves heterogeneous, has to contend with.

Much has been made about the absence of large-scale protests by farmers against demonetization, as if farmers could march in the streets at the time of harvest, leaving their crops untended. On this topic, the journalist Ugale told me that some farmers had contemplated dumping tomatoes outside the collector’s office, but then changed their minds, thinking: “Even if we protest, what will we achieve?” Ugale trailed off and then, in a somber tone, concluded: “Helplessness and apathy, that’s what I see everywhere.”